Individuals & Retail Investors

Reforms under consideration could undermine the convenience and stability of money market funds—and turn investors away from these funds. The resulting impact to individuals would come in many forms:

  • Impact Cost and Availability of Short Term Credit
    Money market funds hold a significant share of the asset-backed commercial paper that finances credit card, home equity, and auto loans. Eliminating or rapidly shrinking these funds could disrupt the flow of short-term credit, driving up the cost and limiting the availability of financing for some time.
  • Restrict Access to Higher Yielding Investment
    Money market funds have long provided a convenient and low-cost means for households and individuals to obtain access to higher-yielding money market instruments. For retail investors, money market funds have paid at least $225 billion more in returns than competing bank products since 1985. Proposed federal changes could render these funds unviable for individual investors.
  • Impact Employment
    Money market funds hold more than one-third of the commercial paper that businesses issue to finance payrolls and inventories. Federal proposals could drive up the costs to these employers, affecting current employment and future job creation.
  • Increase Taxes and Reduce Community Services
    Money market funds hold more than half of the short-term debt that finances state and local governments for public projects such as roads, bridges, airports, water and sewage treatment facilities, hospitals, and low-income housing. Without that financing, local governments may be forced to limit projects, spend more on financing, or increase taxes.